The issue of whether or not attorney fees can be recovered under the Miller Act is a topic routinely discussed by courts, and by us on the Lien blog, because the law on this issue is complex, confusing, and unclear. One of the trickier aspects of determining whether, or under what provision, attorneys fees may be recovered is relationship between federal law and state law. A relatively recent Georgia case provides some insight into this issue.
Background on the Georgia Case
In U.S. ex rel. New Millenium Building Systems v. Paul S. Akins Company the U.S. District Court for the Middle District of Georgia examined a Miller Act claim in which the plaintiff sought attorneys fees.
The construction project underlying the case was the construction of a dining hall at Fort Benning. The prime contractor on the project, Paul S. Akins Company, hired subcontractor Steel-Plus, LLC (“Steel-Plus”) who, in turn, hired the plaintiff, New Millennium Building Systems, LLC (“New Millenium”) as a supplier. This suit arose after New Millennium alleged non-payment of certain invoices submitted to Steel-Plus. In addition to payment of its unpaid invoices (through a bond claim under the Miller Act), New Millennium also requested attorney fees under Georgia state law.
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Relationship Between State and Federal Law
Generally, when a conflict exists between state and federal law in an area normally under the purview of federal law, federal law triumphs. In the U.S., there are multiple bodies of law governing and regulating conduct. These laws range from municipal ordinances all the way up to the “supreme law of the land”, the Constitution. Generally speaking, these different bodies of law are concerned with vastly different aspects of legal regulation. Just as you wouldn’t look to the Constitution or Federal Code to determine the noise regulations in your community, you wouldn’t look to city laws for regulations regarding interstate commerce. When the laws conflict, either expressly or by implication, there needs to be a way of determining which law controls.
When federal and state law conflict, which controls?
In this regard, your intuition is likely correct. While the relationship between state and federal law is very complex, for our purposes it will suffice to know that generally, when a conflict exists between state and federal law in an area normally under the purview of federal law, federal law triumphs. This is known as federal preemption of state law. It is also worth noting that, even in a general area where state law and federal law can coexist, the specific law giving rise to a plaintiff’s claims will be the controlling law for that action.
New Millennium and Attorneys’ Fees Under Miller Act Bond Claims
The remedies of the Miller Act, as a federal statute, are clearly governed by federal law – and therefore, “the substance of the rights created, and the scope of the remedy” thereunder is determined by federal law. This includes the decision of whether an award of attorney fees is allowed.
The general rule in federal law is that attorney fees are generally not available unless allowed specifically by statute or a contract provision, or due to the bad faith or otherwise vexatious or oppressive conduct of a party. It is unfortunate for a Miller Act claimant, then, that the Miller Act does not specifically provide for an award of attorney fees to a prevailing party. As noted in an earlier post, attorney fees may be recoverable in a Miller Act suit if an express contractual provision so holds.
This does not, however, necessarily mean that claimants may never recover attorney fees when unpaid for labor and/or materials furnished to a federal project, even if the contract doesn’t expressly provide that an award of attorney fees is warranted. The court in New Millennium held that, since: 1) federal law solely governs the scope and substance of the remedy under the Miller Act, and 2) that New Millennium’s only claim against the bond arose pursuant to the Miller Act; New Millennium’s claim for attorney fees under state law must fail. Further, the court also noted that 1) federal law does not allow for an award of attorney’s fees absent a specific statutory right or specific contract language, 2) the Miller Act does not specifically allow for attorney fees, nor did Congress intend to provide for attorneys’ fees under the statute, and 3) the expectations of potential litigants are better served through a uniform federal rule (no attorney fees though Miller Act claims [at least absent specific contractual provisions]). In this light, while it may be possible to recover attorney fees in a Miller Act suit pursuant to a specific contractual provision, it is unlikely attorney fees would ever be awarded absent such a provision.
A subcontractor’s exclusive remedy against a surety (recovery under the Miller Act bond) on a federal construction project is through the Miller Act, so state law allowing for an award of attorney fees will not apply, even if, as in this case, the state law does not explicitly limit its application to bonds created under state law.
This does not, however, necessarily mean that claimants may never recover attorney fees when unpaid for labor and/or materials furnished to a federal project, even if the contract doesn’t expressly provide that an award of attorney fees is warranted. While an award of attorney fees is not appropriate for a claim made against a bond solely pursuant to the Miller Act, absent a contractual provision providing for them, there may potentially be some wiggle room here for certain claimants. The Fifth Circuit has held that the Miller Act does not preclude a federal court from exercising supplemental jurisdiction over state law claims against a contractor. U.S. ex rel. Cal’s A/C & Elec. v. Famous Constr. Corp., 220 F.3d 326, (5th Cir. 2000). In such a case, an award of attorney fees against a contractor may be appropriate, depending on the particular state law at issue. This also holds true for federal courts exercising diversity jurisdiction over a case consolidated with a Miller Act claim. The distinction, then, is that attorney fees are not available when the underlying claim arises solely from the Miller Act, i.e. claims against the bond; at least in the event that there are no specific contractual provisions to the contrary. If the underlying claim itself does not arise from the Miller Act, but rather through state law, a federal court may be able to exercise supplemental jurisdiction to decide the matter, and an award of attorneys’ fees may be appropriate.
The Miller Act and Attorney Fees
So, what is the end result of all this? Can a claim for attorney fees be successful under the Miller Act? As I’ve said too many times, the answer is “Maybe.”
Since the Miller Act does not expressly provide for attorney fees, the only way such an award would be appropriate in a suit arising under the Miller Act is if a contract clause provides for their award. While there is some disagreement in the courts, the modern trend is that attorney fees are awarded when the claimant’s contract contains an attorney-fee clause. This reasoning seems to be based on the previous language of the Miller Act, which allowed claims for “sums justly due.” That phrase has been interpreted as allowing the recovery of any amount owed to the claimant under the claimant’s contract. While the “sums justly due” language has been removed from the text of the Miller Act, courts still use that reasoning to award attorneys’ fees to claimants whose contracts include an attorneys’ fees clause.
In New Millennium, it is unclear if New Millennium’s contract included such a clause. Presumably, despite the court’s relatively cool disposition toward attorney fees in this context, attorney fees may be allowed. In the absence of such a provision, however, New Millennium would be unable to recover attorney fees.